30-07-2025
Hongkong Land sees recovery in office market with more demand
[HONG KONG] Hongkong Land, the biggest commercial landlord in Hong Kong's financial district, is seeing a recovery in the city's ailing office market.
'There has been an uptick in inquiries in the first half of this year, particularly in the second quarter. So I think that's a positive sign,' chief financial officer Craig Beattie said, referring to leasing interest in the company's office space. 'The market spot rents are stabilised.'
The developer still anticipates negative rental reversions, leases signed at lower rates, but it expects the size of the reversion to narrow over time, Beattie added.
Hong Kong's office market has been going through a challenging time in the past few years as demand shrinks amid an increase in supply. Office rents are at the lowest in more than 15 years, data from Colliers International show.
Even a large landlord such as Hongkong Land is under pressure in the weak market. Average office rents in its portfolio decreased to HK$95 (S$15.57) per square foot at the end of June, compared with HK$103 the previous year, according to its interim results announced on Tuesday (Jul 29).
Its underlying profit, excluding mainland Chinese non-cash provisions, rose 11 per cent in the six months ended in June from a year earlier.
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The real estate firm's recent shift in strategy to focus on commercial property and share buybacks have boosted investor confidence. Hongkong Land's shares have gained more than 43 per cent since the beginning of the year, making it one of the best performers among its peers. In comparison, the Hang Seng Properties Index is up about 26 per cent this year.
In its biggest pivot in years, Hongkong Land announced a strategy last October to forgo residential development. The firm will eventually set up real estate investment trusts to establish recurrent income with management fees.
The firm set a target to generate US$4 billion in recycled capital by disposing of non-core assets by 2027. It has attained 33 per cent of this target, including selling part of an office tower in Hong Kong for US$810 million in April, with proceeds going to enhance its properties, debt payments and share buybacks. The company also reached 67 per cent of its US$200 million share buyback programme by December.
Hongkong Land, a subsidiary of conglomerate Jardine Matheson Holdings, owns office buildings and shopping malls in Hong Kong, Singapore and mainland China. It is Central's biggest landlord with multiple walkway-connected towers housing the likes of JPMorgan Chase in the heart of the financial district. BLOOMBERG
